Commodities Daily - July 14, 2021

> Oil prices rise on upbeat IEA report and ahead of weekly EIA inventory data. This morning, Brent is hovering above $76/bbl after the API overnight reported another US crude oil draw (down 4.08 mln bbl w-o-w), as well as a decrease in gasoline inventories (down 1.54 mln bbl) and a build in distillates (up 3.70 mln bbl). Fed Chairman Jerome Powell will present the semiannual Monetary Policy Report to Congress today, while investors will also be eyeing the weekly EIA inventories report and a US June PPI print. In our view, what is likely to be an upbeat EIA report confirming crude oil and gasoline stock draws amid rising demand should support Brent back to $76.60/bbl today. The US June PPI data release carries downside risk for global market risk sentiment and a high reading would provide oil price headwinds.> Gold trades sideways amid US inflation data. Gold stuck around the $1,805/oz level yesterday while the 10y US Treasury yield climbed from 1.37% to 1.42%. US inflation for June came in well above expectations. Bullion is trading near $1,810/oz as we write. Today all eyes will be on US PPI data and Fed Chair Jerome Powell's testimony before the US Congress. We expect bullion to test support at $1,800/oz.OIL PRICES RISE ON UPBEAT IEA REPORT AND AHEAD OF WEEKLY EIA INVENTORY DATAAt the start of the day yesterday, Brent gained $0.60/bbl to $75.80/bbl following the release of the monthly IEA report, which said that global oil markets are set to "tighten significantly" unless OPEC+ agrees to increase production, with "the potential for high fuel prices to stoke inflation and damage a fragile economic recovery." OPEC+, beset by the dispute between Saudi Arabia and the UAE, is set to keep output levels unchanged in August even as fuel consumption bounces back and summer driving demand peaks. The IEA also revised upward its 2021 demand forecast by 0.06 mln bpd and now sees a y-o-y increase of 5.39 mln bpd for a 2021 average of 96.45 mln bpd. North America and China saw the largest upward demand revisions, which were partly offset by downward revisions to Europe and Japan. Robust economic growth, rising vaccination rates, increasing mobility and the easing of social distancing is expected to underpin the stronger global oil demand. Overall 2021 non-OPEC supply estimates were unchanged. Preliminary data for June showed OECD total oil and refined product inventories down by 22 mln bbl in the month, with stocks now below the 2016-20 and 2015-19 five-year averages. Later in the day yesterday, Brent briefly eased to $74.90/bbl before starting to rally toward $76.60/bbl, supported by the news that the Iranian nuclear deal talks face more delays - Bloomberg reported that they were unlikely to be resumed before Iran's new president comes into office next month (two unidentified officials said the next round of talks would kick off only around mid-August), which means dwindling chances for an early resurrection of the deal struck six years ago and a subsequent jump in Iranian oil exports. The US stock market came under pressure yesterday - which provided oil price headwinds - as US CPI inflation in June was reported far above expectations (at 0.9% m-o-m and 5.4% y-o-y) amid supply constraints and a continued uptick in prices for travel services versus the depressed levels last year during the height of the pandemic. Brent closed at $76.49/bbl, up $1.33/bbl on the day.This morning, Brent is hovering above $76/bbl after the API overnight reported another US crude oil draw (down 4.08 mln bbl w-o-w), as well as a decrease in gasoline inventories (down 1.54 mln bbl) and a build in distillates (up 3.70 mln bbl). Fed Chairman Jerome Powell will present the semiannual Monetary Policy Report to Congress today, while investors will also be eyeing the weekly EIA inventories report and a US June PPI print. In our view, what is likely to be an upbeat EIA report confirming crude oil and gasoline stock draws amid rising demand should support Brent back to $76.60/bbl today. We are likely to receive an elevated PPI reading today, which is negative for risk assets, as it implies the Fed becoming more hawkish LD TRADES SIDEWAYS AMID US INFLATION DATAGold opened and closed near $1,805/oz yesterday, while the 10y US Treasury yield rose from 1.37% to 1.42%. EUR/USD eased from 1.186 to 1.178, creating a headwind for gold. The US CPI US for June reached 0.9% m-o-m, its highest level since 2008, and well above the consensus forecast of 0.5%. In y-o-y terms it was also significantly higher at 5.4% versus the 5.0% consensus. Gold initially experienced significant pressure following the inflation data and tested resistance at $1,800/oz amid expectations of a hawkish Fed reaction. However, as investors digested the CPI report more thoroughly, they identified some interesting data points. Used cars accounted for more than a third of the dramatic rise in inflation, which can be explained by the global chip shortage and its limiting effect on new car production. The rest of the increase was mainly attributable to sectors affected by the reopening of the economy, such as hotels, car rentals and the cost of food away from home. These findings support the Fed's view that the uptick in inflation should prove temporary and can be discounted. After the slight correction, gold advanced and eventually closed near $1,805/oz.Gold is still trading near $1,810/oz as we write. Today, the market awaits the US PPI for June and the first day of Fed Chair Jerome Powell's semiannual testimony before the US Congress. The consensus is calling for the US PPI to reach 0.6% m-o-m and 6.7% y-o-y. In light of the CPI data, we think the PPI numbers are likely to overshoot the consensus, which would create additional headwinds for bullion. We also expect Powell to reiterate the view that the rise in inflation is temporary, which could support gold, but otherwise we expect him to set forth hawkish views. On the back of today's agenda we expect bullion to retest support at $1,800/oz today, while an advance to resistance at $1,820/oz seems